Nvidia CEO says AI race is on as uncertainly looms over its China business

Tech company reports 59 per cent rise in second-quarter profit

Nvidia chief executive Jensen Huang. Reuters

Chip maker Nvidia remains confident about the future of artificial intelligence after the world's most valuable company reported a 59 per cent annual rise in its second-quarter profit for its 2026 fiscal year.

Profit was boosted by strong data centre revenue, although uncertainly remains about the company's future business in China.

Net income in the three months to the end of July jumped to $26.42 billion, beating analyst expectations, the California-based industry bellwether said on Wednesday.

Revenue for the period climbed 56 per cent year on year to $46.73 billion, driven by demand for its accelerate computing programme used for large language models.

“The AI race is on, and Blackwell is the platform at its centre,” said Nvidia founder and chief executive Jensen Huang, referring to its AI infrastructure.

The chip maker expects revenue this quarter to be 54 per cent, plus or minus 2 per cent. However, it does not assume any H20 shipments to China in its outlook.

“We had a record quarter without China and we just guided a record quarter without China,” Mr Huang told Yahoo Finance.

“I see AI opportunities across all of the cloud, enterprise and industrial applications and robotics, and self driving cars and digital biology, and drug discovery. We just see AI deploying everywhere.”

He also said the company was keen to capitalise on the growth of the AI market in China.

“China has 50 per cent of the AI researchers in the world. They have lots and lots of AI companies and they have lots of AI chip companies. Without us there, they will obviously have their own alternatives – and they have been growing,” he said.

“If we have an opportunity to go compete for that market, it would be great for America, it would be great for China, and we have an opportunity to go capture some of that $50 billion market that is growing at about 50 per cent every year.”

While the US government is willing to take 15 per cent of Nvidia’s revenue, Chinese buyers are reluctant to purchase American chips, said Ipek Ozkardeskaya, senior analyst and Swissquote Bank.

“That doesn’t mean Nvidia will never sell to China again – on the contrary, CEO Jensen Huang said that selling Blackwell to China is a real possibility. But for now, the company has the luxury of ignoring that opportunity. And note: $54 billion in revenue without China would mean a 15 per cent jump in just one quarter. The numbers are gigantic.”

But the company's data centre revenue, one of the company's key segments, fell slightly under Wall Street estimates, rising 56 per cent to $41.1 billion.

Nvidia said $33.8 billion of its data centre sales were “compute”, or its GPU chips. The company said compute revenue fell 1 per cent from the first quarter due to a $4 billion reduction in H20 sales.

Nvidia shares fell during after-hours trading.

“The shift is that the company’s moved from hyper growth to high growth,” said Nigel Green, chief executive of global financial advisory giant deVere Group.

“This matters because markets have priced Nvidia as if its rate of expansion could continue indefinitely, and that level of outperformance was never sustainable.”

Nvidia rose to prominence amid the generative AI boom, significantly increasing its research and manufacturing to cater to players in the hotly contested industry serving applications.

In late June, Nvidia overtook Microsoft to become the world's most valuable publicly traded company. Shortly afterwards, it became the first to hit a market capitalisation of $4 trillion, beating Microsoft and Apple, which had both been tipped to reach that milestone first.

The company, and the wider AI market, hit a snag last week after Sam Altman, the chief executive of ChatGPT maker OpenAI, reportedly said the AI market is in a bubble, causing Nvidia's stock to drop 3.5 per cent.

But with its second-quarter results, and “as the world's most valuable company with a large weighting in major indices, Nvidia’s results directly affect market direction”, Milad Azar, a market analyst at broker XTB Mena, told The National.

“Its financial disclosures are now seen not just as corporate updates but as important indications that can either support the ongoing AI-driven rally or prompt caution among investors.”

Nvidia is valued at about $4.3 trillion, data from CompaniesMarketCap shows. The company makes up about 8 per cent of the S&P 500 – a record for a US company. Its value is also bigger than the entire global cryptocurrency market, according to trading platform eToro.

The company also said it is continuing to increase its Blackwell architecture, which rose 17 per cent from the previous quarter, including its Blackwell Ultra architecture.

“Blackwell is the AI platform the world has been waiting for, delivering an exceptional generational leap. Production of Blackwell Ultra is ramping at full speed, and demand is extraordinary,” Mr Huang said.

Nvidia earnings in focus

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“Investors are compelled not only by Nvidia’s incredible return on equity and free cash flow, but also by its ability to maintain an innovation edge in GPUs and data centres, ensuring it retains top spot in the space for some time,” Chris Weston, head of research at broker Pepperstone, told The National.

“Despite increased political challenges over the past 12 months, the investment case for Nvidia remains strong.”